BASF Makes Offer to Acquire Ciba

15/09/08 BASF plans to acquire Ciba Holding AG, Basel, Switzerland, a leading specialty chemical company, and will make a public takeover offer to Ciba’s shareholders. BASF will pay CHF 50.00 in cash for each nominal share in Ciba. BASF and Ciba have reached a transaction agreement in which the Board of Directors of Ciba supports BASF’s attractive offer and recommends its acceptance to Ciba’s shareholders. The offer corresponds to a premium of 32 percent above the closing price for Ciba’s shares on September 12, 2008 and a premium of 60 percent above the volume-weighted average share price for Ciba shares in the 30 days prior to announcement of the public takeover offer. Based on all outstanding Ciba shares and including all net financial liabilities and pension obligations, the enterprise value would be CHF 6.1 billion (approximately €3.8 billion).

“With the acquisition of Ciba, we are strengthening our portfolio and expanding our leading position in specialty chemicals with products and services for a variety of customer industries, in particular the plastics and coatings industries as well as water treatment. In paper chemicals, we will intensify the urgently needed restructuring process and become the leading supplier with an extensive portfolio. We will grow profitably in accordance with our clear and successful strategy. The transaction meets our acquisition criteria. We expect that it will make a positive contribution to earnings per share in the second year,” said Dr. Jürgen Hambrecht, Chairman of the Board of Executive Directors of BASF SE. “Our attractive cash offer gives Ciba shareholders the opportunity to realize the full value of their investment plus a high premium immediately,” he added.

“We recognize the strength of broad areas of Ciba’s portfolio, even if the company’s performance has disappointed analysts and investors, especially in the second quarter of 2008. Ciba has a leading market position, in particular with its portfolio of plastics additives and coating effect materials, and offers its customers significant benefits,“ continued Hambrecht. “The integration of Ciba’s activities into BASF and the necessary further restructuring measures will give the businesses sustainable strength and offer them a long-term perspective for profitable growth. The precondition for this is to rigorously improve operational excellence.“

Hambrecht stressed: “We look forward to working with Ciba’s highly committed executives and employees. We offer the company and its employees a new home with a long-term, viable perspective. Basel will remain an important site for parts of the combined business, in particular research, and we will establish a global operating division there. We are convinced that there is a good match between the cultures and traditions of our two companies. BASF plus Ciba is a recipe for both consolidation and profitable growth.”

“Against the backdrop of increasingly challenging conditions within our industry, this is a transaction which combines a fair price with an industrially compelling solution for Ciba,” said Dr. Armin Meyer, Chairman of the Board of Directors of Ciba. “Ciba’s businesses will be strengthened substantially thanks to integration into BASF’s Verbund and the access to BASF’s research, production and marketing platform. This applies particularly in the Plastics, Coatings and Paper divisions. BASF is a long-standing customer and supplier of Ciba and well-acquainted with our people and our business. The acquisition of Ciba by BASF will provide a long-term perspective for profitable growth of the Basel operations in particular and our other businesses around the world.”

“In the current consolidation phase in the chemical industry, the acquisition of Ciba offers clear advantages in terms of global competition,” said Hambrecht.

The merger of the activities of BASF and Ciba would extend BASF’s leading position as a preferred supplier to the plastics industry and make BASF the second-largest supplier of coating effect materials. In the fast-growing and highly profitable market for plastics additives, BASF would expand its portfolio by gaining important product segments such as UV stabilizers and antioxidants. In the area of coating effect materials, the combination of BASF and Ciba would offer an extensive range of pigments, resins and additives.

Thanks to economies of scale and greater efficiency, the resulting leading supplier of chemicals for the paper industry would offer the broadest product portfolio in the industry and with its global reach would provide customers with the best range of products and services in a difficult market environment. Extensive restructuring is necessary throughout the entire paper value chain. By combining and repositioning the paper chemicals businesses of BASF and Ciba, BASF would start this urgently needed process with the aim of ensuring the long-term profitability of these activities.

In addition, the planned acquisition would strengthen BASF’s presence in fast-growing emerging countries and improve its market position in important industries such as automotive, packaging, construction, electronics and water purification. Thanks to the integration in BASF’s Verbund, Ciba’s businesses for attractive niche markets such as oil and mining would benefit from wider market access and BASF’s extensive application and product know-how. This would open up additional growth opportunities. The two companies also complement each other very well with regard to research and development. Combining the specific application know-how of Ciba with BASF’s strong R&D platform would make it possible to provide customers worldwide even faster with better products and solutions.

BASF will publish the formal advance notification in which the offer is officially announced and which contains all the fundamental information on the planned offer. The offer prospectus is scheduled to be published on October 1, 2008. The offer is expected to begin with the publication of the offer prospectus following the approval of the offer by the Swiss Takeover Board and, subject to later extension, will be valid for 20 trading days plus an obligatory extension of 10 trading days in accordance with Swiss law. The offer is subject to a number of conditions. These include the tendering of at least 66.67 percent of all nominal shares, approval by the relevant authorities, as well as the removal of various takeover defenses in Ciba’s statutes. BASF expects to finalize the transaction in the first quarter of 2009 at the latest. The financing for the offer is in place.